Prepare a written management report that includes

Business

The company wants to determine the ideal number of basketballs and  footballs to manufacture that will maximize the facility’s net profit  after taxes.

Management Report

Prepare a written management report that includes, at a minimum, the following sections:

  1. Purpose of the Report
  2. Description of the Problem
  3. Methodology (which would include the model formulation)
  4. Findings or Results
  5. Recommendations or Conclusions

Be sure to address all relevant points, discuss any  assumptions you are making, and highlight the following items in your  report:

  • A recommendation for the number of basketballs and  footballs to manufacture that maximizes net profit after taxes given the  existing constraints.
  • A discussion of which constraints are binding and the amount of slack or surplus in the remaining constraints.
  • A list of recommendations as to what actions the company  may take in the future to increase profitability, and how much extra  profit the company might expect if the action is taken.  Note that these  values can be used by the company to determine whether the expected  gain in net profit will offset any capital investment required to  implement your recommendations.

Remember that you are writing the report from the point  of view of a consultant with senior management of ABCD, Ltd. as the  intended audience.

Hints

  • You need to assume, or guess, an initial number of  production units for each product and proceed with using Excel to  calculate your Net Revenue for manufacturing. It is ideal to set up a  separate section on your spreadsheet that presents the information to be  used in the analysis. This information should be organized under the  headings “Changing Cells,” “Constants,” “Calculations,” and “Income  Statement.”
  • Once your spreadsheet model is designed, you can  proceed  with setting Excel SOLVER to carry the calculation.  Excel SOLVER is an  add-in for MS Excel that can be used for optimization and other linear  programming models. Appendix 7.1 on page of 298 of your textbook  provides an overview of how to formulate a model and use Solver to  extract the required information.
  • Please also note that your tax will be applied to your Net  profit [TR – TC], and if your total cost [TC] is greater than your  total revenue [TR], you will have a loss that will be exempted from tax.  So, in calculating your Tax you need to use an “IF Statement”, i.e., IF  (profit <=0, then put Tax=0, otherwise calculate Tax).

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